Don’t Be Afraid To Get Out Of A Business

Several years ago Nick At Nite started producing original programming. While their initial offerings were successful, later shows failed to grab an audience. As a result Nick At Nite recently announced they are getting out of the business of original programming.

This is by no means the first incident of a company getting out of a business. American Express started as a delivery service, Western Union no longer sends telegrams and recently Ford announced it would no longer make gas powered cars, focusing instead on trucks, SUVs and electric and hybrid vehicles. Companies drop lines of business all the time. For small businesses the need to drop a line of business can be terrifying but necessary.

Every business should evaluate whether a line is profitable enough to continue. That decision needs to be carefully evaluated, looking at not just profit and loss and cash flow but what kind of customer relationship the business engenders. A less profitable business line may well be worth keeping if it engenders a great deal of customer loyalty. On the other hand, a highly profitable business may not be worth keeping if demand is on a constant slide. It was once very profitable to offer dial-up Internet service but if the companies didn’t get into other businesses they went out of business.

For small businesses the idea of cutting off a revenue source may be terrifying. However, you have to look at the health of the whole business. If one business line doesn’t fit the big picture, it’s time to let it go.